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Hillbilly Chicago

I never labeled Jean a “hillbilly,” but I suppose she was.

I had moved from Hyde Park, site of the University of Chicago, to a working-class Chicago neighborhood. The wood frame building contained four apartments, two on the ground floor and two on the floor above. I lived in the apartment fronting the sidewalk. Jean lived on the ground floor behind me.

She was attractive. She had striking black hair and a pretty face and a nice figure. Her lovely appearance, however, was marred by her teeth, which clearly had been neglected. Some were missing. She did not work but was raising what seemed to be at least three children, sometimes more. I never quite understood her biological relationship to all the kids. I think two were hers, including a three-year-old girl who was pretty and a delight. I got the impression that others were children of relatives who were dropped off for extended stays. She apparently had kin in Chicago who had these children, but I never saw any of the adults. Neither did I understand her family history. She had been born in Kentucky, but I did not know when or why she had moved to Chicago. She never mentioned her parents. I believe she told me that she was raised Catholic, which did not fit in with my assumptions of hill folk, but she wore a religious medal around her neck. How she paid the rent and bought groceries was not clear. When I moved in, there was no man in the house, although I got the impression that one had just moved out.

We chatted some as we came and went from the building, but I was surprised when she banged on my door one afternoon. She was hysterical, and it took a while for me to understand her. I learned that she had just come home, and found her door bolted from the inside. She was understandably scared of who was inside, and she indicated that she believed that it was the former boyfriend whom she had kicked out. “He must have kept a key,” is all she could say while crying.

I called the police, and a young officer responded quickly. I explained the situation to him, and he, too, looked scared. (All this gave me a greater respect for the work of the police. He had no idea what was on the other side of the locked door, and he was going to have deal with the situation. The possibilities included a crazy man with a gun or knife.) The Chicago police, at least then, were in single-officer squad cars. He called for backup but thought that he needed to act promptly. I don’t remember how he got into the apartment. And I don’t know what I was thinking when I followed him, although it was at a distance. Jean had just bought one of those living room sets from the kind of furniture store that advertises on late-night television. She was proud of the suite, but now she found her new couch and chair had been slashed again and again. Something like acid had been poured on her coffee table, and the laminate, meant to look like wood grain, had dissolved. But there was no intruder. A window was open in the bedroom. It was only a slight drop to the ground, and he must have fled that way.

Perhaps this gave us some sort of bond, for Jean and I started talking more. I was in law school, and she seemed very interested in that. More and more, she looked at the books I had. In what seemed like an act of courage for her, she asked if she could borrow one. I tried to hide my surprise; if I had thought about it, I would have bet that she had not finished high school. We talked about what she might like to read. I am not sure what she said, but I finally handed her the collected Sherlock Holmes novels and stories. Then, to my further surprise, she returned the book within the week, saying that she had loved it. She looked over at my bookshelves, and she did not have to ask. We went over and found something else for her, and I became a lending library. She, in return, having noticed that I cooked regularly, gave me a cookbook, written by a White House chef for President Kennedy. Why she had such a book remained a mystery. I still use it.

I then started spending more time with her kids.

(continued February 6)

 

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The Personal Legacy of WWII

(Guest post from spouse.)

My namesake was James Miller Herren, Jr. – make that Lt. Col. James Miller Herren, Jr. The beloved baby son of my grandmother and the darling baby brother of my mother, “Mill” was a champion horseman, flying ace, the all ‘round perfect baby-faced charmer of the family…whose P-51 Mustang fell out of the sky over Celle, Germany, on October 30, 1944. He was 28. 

Cleaning out the basement yesterday, we came upon a treasure trove of letters, medals (including two Air Medals and the Distinguished Flying Cross) and military “jewelry” that were from or about Mill. Through this stash, we have learned or confirmed some of his military history.  

While we don’t know exactly when Mill enlisted, by the fall of 1942 he was training pilots in Panama. He writes regularly over the next year that he is very, very busy (and often exhausted) training young men fresh out of high school to be fighter pilots. “They can think up more ways to wreck an airplane,” he writes, commenting more than once on their youth. At the time he himself is only 26 but a Captain in the Army Air Force. By August of 1943, he is a Major preparing his pilots for combat in Europe. 

His letters are hand-written on air mail parchment. They are sent from the 24th Fighter Squadron in Panama through an APO address in New Orleans to his parents in Ashland, Alabama. The ink may have been blue or black, but age has turned it sepia. They start “My dears,” or “My pets,” and always send love and sweetness…and often money. They conclude “Devotedly” or “Love to all.” He begs for letters from home. “I’m really gonna quit you,” he writes, “if you don’t sit right down and talk to me a while.” He buys a car; an old girlfriend marries someone else (he’s okay with it); he flies some buddies to Costa Rica for a little R&R; he meets the president of Guatemala at a reception. He works and works and works. He sounds content and extremely proud of his squadron. 

There is the suggestion from some earlier letters (undated, but probably around 1937 or 38 while he was a student at Auburn) that there had been a major disturbance in the family equilibrium…disturbing enough that my grandmother kept letters about it. “My dearest,” he writes to his mother. “It isn’t you that has failed us – if anything it’s I that has done the failing. I’ve realized for so long what was wrong at our house but I’ve rationalized to the point where I thought things would surely improve. If when realizing it I had done something maybe it would have helped, but it hurt me so much that I just couldn’t believe it was really happening.” He continues his profuse apologies and vows to leave school if his father remains set against him. “Mother darling,” he writes. “Words can’t express what you mean to me so please don’t give me up as a bad job.” We know my grandfather drank heavily and think he may have hurt Mill’s mother. This would have led to a major, unspecified confrontation. Subsequent letters arriving from Panama, however, do not address this incident and, in fact, send love, presents (a unique fountain pen) and offers of money to his father to help his struggling business ventures.  

Sometime around the late summer or early fall of 1943 Mill is promoted to the rank of Lieutenant Colonel and his unit is incorporated into the newly-formed VIII Air Force stationed in Los Angeles. He became the commander of one of three (the 434th) Fighter Squadrons in the 479th Fighter Group* of the VIII Air Force in the European theater sometime before February 1944. The 479th was moved from California to England in May of 1944, in time for the 434th to patrol the beachhead in the Normandy invasion on D-Day. “I wouldn’t take anything for being in on this deal,” writes Mill on June 8, 1944. “The scope of the thing is darn near too much to believe, even when you see it.” 

The most moving letter comes from Col. Hubert Zemke, who, as commander of the 479th, was Mill’s commanding officer on October 30, 1944. The letter is dated 31 July 1945 and arrives in Ashland from Missoula, Montana. “As you probably know,” types Col. Zemke in an almost typo-free letter, “the mission that Miller and I went down on was to be my very last. [They were escorting B-24 bombers in a mission to take out an oil refinery north of Hannover.] Since it was my last I wanted to lead the best squadron in the Group so I chose Miller’s squadron. This automatically placed Miller on the ground that day. Of course this didn’t please him too much as he had been having a tremendous amount of success and the day’s prospects looked quite good. Miller was always that way. Perhaps too overeager.” So he lets Mill command a section of the squadron. 

Taking flak over Hannover, they turned east, running into a “terrific thunder cloud, which none of us knew existed.” At a radioed suggestion from Mill, they turn around, only, says Zemke, to enter “into the roughest flying condition that I’ve ever encountered.” His plane bounced around, iced up and started spinning. Zemke pulls out of the spin only to realize that he is in a “terrific dive,” severe enough that his wings snapped off. Somehow he is thrown from the plane; somehow his parachute opens; he lands “with a thud into a swamp.” The local village is aroused. Zemke is “overtaken by about twenty hunters armed with every sort of weapon. Their reaction towards me was of curiosity. In no way did they harm me and they went as far as washing the blood off my face at a farmhouse I was taken to.” Later two Luftwaffe Officers came and took him to their station in Celle. “While enroute there one of the two officers told me another American officer had been found near the spot where I had been taken but he had lived only an hour or two….It was later found that this flyer was Miller.” What happened to Zemke between October 1944 and July 1945 is left unanswered in this letter, but he tells that story in a book he wrote in 1991 entitled Zemke’s Stalag: The Final Days of World War II. 

The horror was that my grandmother received word in October 1944 that Mill was missing but waited in anxious hope for another six months until having his death confirmed in March 1945. 26,000 members of the VIII Army Air Force were killed in World War II. Mill’s story was, tragically, not uncommon. 

Gene Miller Jonakait (née Knopf) was born May 15, 1946. She is honored to be known as “Mill.” 

____________________________________

*There were 22 Fighter Groups with varying numbers of Squadrons with the VII Army Air Force. Their numbering remains a puzzle to me.

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Joseph and the Amazing Williamsburg Bank Building (concluded)

I told Joseph, the bar companion who had moved into what was known as the Williamsburg Bank Building, about the building’s marvelous lobby. He was surprised. He had never seen it. The Brooklyn Flea had moved on to other winter quarters. Joseph had not seen the observation deck either. He did not know the building had one, and apparently it is never opened now. He knew nothing about the building’s history, neither that a bank had once been there, that dentists had populated the spaces now containing apartments, that it was for a long time the tallest building in Brooklyn. It was all ancient history, and I realized, yet again, that time marches on and that New York City, while always the same, is always changing. I thought about what Giuseppe di Lampedusa said in The Leopard: “If we want things to stay as they are, things will have to change.”

Joseph and I went on to other topics. I asked the standard, “What do you do?”  He replied, somewhat vaguely, that he was in “energy infrastructure.” With a bit of prodding, he added that he worked for a pipeline company. Perhaps because he had encountered in the unthinking parts of New York City a disdain for this kind of business, he seemed apologetic about his work. Of course, pipelines are necessary, I thought. I want gas and oil to reach my home, power plants, and service stations, and pipelines are part of that process.

We switched topics again, this time back to the baby he and his wife were expecting. Joseph knew it was going to be a girl. I asked about possible names. He said that he and his wife had floated a possible one and had received enormous flak about it from relatives, and they had abandoned that name. Although they had selected another one, they were keeping it to themselves. But his excitement was evident, and after what appeared to be the briefest internal struggle, he said it would not matter if he told me. They planned to name the girl Luna. (And in my Brooklyn way, I wondered if they knew that name’s connection with Coney Island.)

He went on to say that he was going to name his first boy Declan. I voiced approval and said that was a good, strong name, but the bartender warned that the tyke might be called Dekkie. Joseph immediately responded that Declan would beat up anyone who called him Dekkie and then stand astride the fallen transgressor and loudly proclaim, “My name is Declan.” Joseph laughed.

Joseph is an American-Irish Catholic. His wife’s father was Australian and her mother mainland Chinese. The father-in-law was a diplomat, and his wife’s parents had met when the father had been working in China. Because of her father, Joseph’s wife had lived in many places growing up. Joseph thought that that was a good thing and was hoping that his children could live abroad before the family would settle for good in New York.

His wife, whose name I never got, worked for an international bank. Joseph also seemed apologetic about that. I said that I had a good friend who worked for the same institution as his wife, and the friend was a good guy. I joked (I think) and said that not all bankers were bad people, but that it did increase the odds.

I learned his last name and was taken aback. I knew of his family. They had been important in New York Democratic politics. I told Joseph that I had worked with a family member of his who had been on the board of the institution where I had worked. Joseph told me that that was his father. He asked when I worked with him, and I said that it was maybe twenty years ago. He replied that his father had mellowed since then. “Now he is my friend,” he quietly said.

I silently blessed Joseph when he seemed genuinely surprised that I was older than his father. Or at least I wanted to believe that he was genuinely surprised.

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Joesph and the Amazing Williamsburg Bank Building

I met Joseph in DSK, my local bar. He had just moved into the neighborhood. He said he was getting out as much as he could. His wife was expecting in two months, and he knew that nights out would soon be rare.

He had recently moved into a building that now goes by its street address, but what we older Brooklynites still think of as the Williamsburg Bank Building. Its official name when it opened, at the quite inauspicious time of April 1929, was the Williamsburg Savings Bank Tower. At thirty-seven stories, it dominated the skyline. It was the tallest building in Brooklyn until 2010. Now several buildings are taller, but I am glad to report that my view of it from my back window remains unimpeded.

Occupying most of a block, the building ascends straight up for about twenty stories and then has a few setbacks. A tower a fraction of the building’s base then goes up for, perhaps, ten floors more with a dome at the top. To me this architecture creates an amusing sight because from a distance the building with its middle tower looks as if it were flipping the bird, although I never could determine to whom it was saying, “Screw you.”

A four-sided clock is just below the dome. The clock can be seen from quite a distance, and I have checked it many times. It is always disconcerting to look up and realize that the clock is malfunctioning, which happened frequently a decade ago.

The lobby was a banking hall, the place for transactions with the Williamsburg Saving Bank. The hall was sixty feet high and ringed at the top by a mezzanine that contained banking offices. The ceiling had mosaics and wall frescoes. The use of marble was not stinted. This was a bank in the old-fashioned manner with openings in grillwork for teller after teller after teller. This was never my bank, but I opened an account for the daughter there, and every so often I would go with her there to make a deposit or withdrawal. We always felt a bit in awe of the surroundings. In such a place, money was never a frivolous thing; you had to feel that money approached the sacred, a feeling that I never have scooping bills out of an ATM.

The building’s upper floors had offices many of which, for reasons I don’t know, housed dentists. I went to one there a couple times a generation ago, and I swear that when I got off the elevator to go my scheduled appointment, I could smell ether in the corridor.

The building has a wonderful observation deck, but I only remember the one time that it was opened as part of a community house tour. I could walk in a circle, well really a rectangle, around the building. The views were unimpeded in all directions. Look, there is the Empire State Building. There is the Verrazano-Narrows Bridge. Am I deceiving myself, or can I really see planes taking off at JFK and LaGuardia?

Ten or fifteen years ago the building was sold. The Williamsburg Savings Bank would no longer be there, and the building was rebranded as One Hanson, and that is the only way my bar companion knew it. The upper floors were converted to apartments. The daughter, her then girlfriend, and I went to look at some, and they seemed a bit cramped and shoddy. Then again, many New York City apartments feel that way to me. I have gotten spoiled by the gracious feel of my nineteenth-century townhouse. I have lived for a half century with ten, eleven, and twelve foott ceilings, and where a normal sized room is twenty feet by twenty feet or even larger. The floors are a foot or more above the ceiling below with insulation in between, and the walls give off the solid feel that only real plaster can do. Sheetrock, lower ceilings, and smaller rooms always make me think a place is cramped and shoddy, but the converted apartments may not feel that way to others, and the apartments did have spectacular views of New York City.

The lobby was closed on the day of our real estate visit. For a while, however, the Brooklyn Flea, a trendy and large operation, used that space as its winter base. With the craftsman, peddlers, browsers, and gawkers crowded into it, the lobby felt different, but much of the hall’s grandeur was still startingly evident. The Brooklyn Flea also used the basement, and for the first time, I saw the vault with its massive, gleaming door.

This old banking hall is one of Brooklyn’s marvels. When I considered putting a tour together of my neighborhood, I enquired if I could bring groups to see the lobby, but I was told that it was now closed to one and all. That’s sad. Maybe it could somehow at least be rented out for weddings and the like.

(Concluded January 30.)

 

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Snippets

Few of us have thought much about Sebring, Florida. Perhaps some knew of a famous road race held there, but not much else. So little attention was paid when the news flashes reported the killings of five people in a Sebring bank. Of course, similar occurrences happen frequently in this land of the free. Sebring is a backwater so there’s no reason to give these particular murders much note. I, however, did pay attention. I have spent many hours in Sebring. The parents lived there, and the spouse and I owned their residence situated in a quiet and friendly little neighborhood. I wondered if the parents had ever gone to the bank where the shootings had happened and what their reactions would have been if they still lived there. But then my attention was diverted. Almost simultaneously with the slaughter, the president was promoting a new slogan, “Build a Wall and Crime Will Fall.” The Sebring shooter, reports indicate, had moved to central Florida from Indiana, and I wondered if the president was going to propose the building of a wall along the Ohio River, the Hoosier State’s southern border.

 

Many sources reported that China landed a rocket on the dark side of the moon. Of course, this was wrong. One side of the moon does always face away from earth, and we terrestrial-bound humans never see it, but that side of the moon is not in perpetual darkness. It gets sunlight as much as the side of the moon we can see. I am glad to say that while many sources had it wrong, many more correctly said that the rocket landed on the far side of the moon.

 

I saw Carol Channing, the Broadway legend who died recently, live but once. It was on Broadway, but she was not in a play. She was in a play’s audience, as were the spouse and I. It was the commedia del arte play Scapino with the effervescent Jim Dale. The production was at the Circle in the Square Theater, where the audience sits on three sides of the stage and the audience members can see each other. Miss Channing was in the section off to our right, and she sat, as Carol Channing ought, with wide eyes and an open mouth during the entire performance. A bevy (that doesn’t seem like the right word; perhaps a “handsome”) of young, good-looking men sat with her. She looked as if she enjoyed the play. I know that the spouse and I did, partly because the performance contained a special moment. A running gag throughout this romp of a play was that any character exiting the stage would bid his fellows “Ciao!” Then everyone on stage, seriatim, would say “Ciao!” As intended, this chorus of six to ten “Ciaos” started to get laughs. The magical moment came after this was done for the dozenth time. After the litany of “Ciao,” a sweet, quiet, but confident “Ciao” came from the front row of the audience. An adorable six-year-old, beaming boy had called it out to the exiting player. The cast could not help themselves; they struggled not to, but they broke up in laughter, and we in the audience broke up, too, laughing a prolonged and uproarious thank-you to the entire enterprise. During the curtain calls, Jim Dale remarked on the special audience, special performance, special afternoon. And we shared this unique moment with Carol Channing!

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I Get a Kick Out of . . . Coats

A Guest Post by the Spouse

I get no kick from sports cars.  

Riding at all in a car that’s too small, well,  

Neither do I much like boats.  

But I get a kick out of … COATS.  

 

With apologies to Mr. Porter, it has recently crossed my mind that during my lifetime I have coveted neither diamonds nor fancy cars, but have always loved coats (well, and dinnerware — dishes and glassware and cutlery — but that’s for another day).  

My first “necessary” coat was in graduate school. It was Chicago, after all, and one needs a warm coat in Chicago, but warmth was only a secondary consideration. In the late 60’s, surplus army/navy stores were all the rage (at least for poor graduate students), and I desperately “needed” a Navy pea coat. It was a navy blue (duh), double-breasted, heavy wool jacket with broad lapels and large buttons with a navy anchor etched into them. You can buy one today at L.L. Bean for $279. Mine cost around $15. I also had to have the pants to go with. They were navy blue (duh), heavy wool trousers with wide bell bottoms and, instead of a zipper fly, the classic rectangular array of navy buttons. The pants probably cost $10. It was a smashing outfit, if I do say so myself. I must have had a hat, but who cared about hats?!? 

I married, moved to New York, and got a job as a secretary at a publishing house on 59th Street off Lexington Avenue. My husband was in graduate school and I was a secretary. We were lucky to make the rent. My coat at the time was a navy blue (duh), nondescript cloth coat (think Pat Nixon) – longer than the pea coat, but lined and warm enough. I had that coat for a long time…long enough that the polyester lining started to fray. New coat? No way. New lining? Okay. And so it lasted until the cloth itself started to fray.  

Sometime during those years I also acquired a beautiful springtime coat. I bought it in a thrift shop in San Rafael, California, when visiting my sister. Long, flowing, sky-blue (duh) light wool, with no buttons, zippers or belts. Very stylish.  

Back in New York and on my way to work every day I would come up the stairs of the Lexington Ave. subway to be met by the windows at Bloomingdale’s (“like no other store in the world,” they said). I was making $135/week, so Bloomingdale’s was not exactly within my budget.  

But, of course, I wanted a new coat from Bloomingdale’s. 

When my husband started a paying job and the rent was no longer at issue, it was time for me to get a new coat…at Bloomingdale’s. This was perhaps the most generous gift my husband ever gave me: a long black wool coat with the most luxurious gray fox collar ever to be had on earth. The coat cost $200! It was mine, and I looked smashing in it, if I do say so myself. The hat was a $9 black beret. That Christmas I got black leather gloves. I never loved any other coat as much as I loved that coat. 

But I had always really in my heart of hearts wanted a fur coat – a mink coat – not a mink jacket — a mink coat. My husband thought me shallow for wanting such a status symbol, but I couldn’t help it. So, when, after six years of graduate school and another six as a post-doctoral fellow, I finally got a paying job as an assistant professor, I went hunting for a mink coat with my husband’s reluctant acceptance of my deep superficiality. What I learned is that there are mink coats and mink coats. There are mink coats that cost $1000 and there are mink coats that cost $15,000, and the latter are, in fact, nicer than the former. During my search, I became secretly disappointed that I was not going to be able to buy one of those really gorgeous mink coats, but I bought one that I could afford, and thought it wonderful. It was, indeed, a lovely, classic brown coat (matched my hair) with shoulder pads (stylish at the time), and I looked smashing in it, if I do say so myself. 

Mink coats were not for everyday going to work, so I moved on to other coats: one was down-filled with a beautiful fox collar, and when down-filled coats went (briefly) out of style, a blond wool one with the most gorgeous fox collar ever to be had on earth, and yes, I looked smashing in them, if I do say so myself.  

After some years, fur became de trop and shoulder pads went out of style, so I had the mink coat re-styled. Since its restyling some twenty years ago, I think I’ve worn it once.  

Somewhere along the way, my enthusiasm for coats faded. Maybe it was the disappointment in the restyling of my mink, or perhaps it was after the moths decimated my sky-blue spring coat and my blond wool one, too. As I became more matronly, my desire for pizzazz seemed to be replaced by a need for functional comfort. My go-to coat became an all-weather coat from Land’s End with a hood. Boring, but functional. 

But then…two years ago my daughter found – yes, found! – the most amazing jacket. It’s designed for a man, but uni-gender is all the rage, and who cares anyway? Salt and pepper wool with features — wonderful features: a zippered pocket on its front, a zip-in lining with a zippered front giving it a kind of internal vest. She wanted it for herself, but it’s slightly too big for her, and my lovely child has ceded it to me. I do look smashing in it, if I do say so myself. Now if I could only find some black bell bottoms… 

 

 

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Corporate Incentives (or Are They Giveaways?)–concluded

A common complaint about corporate incentives is that the corporations often don’t live up to their end of the deal. Sometimes these complaints are misplaced since it is often the politicians who overstate what a company has promised. Foxconn did not promise to create 13,000 jobs, but the Wisconsin governor gave the impression that 13,000 jobs would be created. The company should not be faulted if that number is not reached. As to the true promises of the corporation, however, they should be made as explicit as possible and with deadlines. The agreement should say, “We, the corporation, will put this amount of capital into the project by such and such date. We, the corporation, will hire this number of people for these kinds of jobs at defined starting salaries by such and such a date.” And so on. If the corporation does not fulfill these promises, then penalties spelled out in the agreement should be automatically imposed. The company should have to pay the governments certain sums or tax abatements should end. If the government commits itself to actions, then the corporation should also commit.

The negotiating governments, however, often seem to be reluctant to play hardball. A good negotiator must be willing to walk away. The corporation can easily do this if it knows that other localities are willing to offer incentives. If New York is not offering enough, Amazon can rightly think, “Let’s see what St. Louis has to offer.” Amazon has many places it could go, but if New York thinks Amazon is demanding too much, it can’t simply say we will negotiate with someone else. If Amazon walks away from the discussions, another company is not waiting outside the door to talk with New York. When one party can easily quit the negotiations, and the other cannot, the bargaining positions are not equal, and in this game, the corporation holds the upper hand.

Several states sought Foxconn. The company could play one locality against the other to create a bidding war. If Arkansas is competing against Wisconsin, Arkansas will probably not withdraw until it must offer too much. Wisconsin will have to offer what Arkansas will not, and if that was too much for Arkansas, it is likely to have been too much for Wisconsin. And since the corporation is not in competition with other companies, it does not have to increase its bid. This unequal field means that it will be normal for governments to make risky offers.

In assessing the deal, however, we should not just focus on one total dollar amount as if it were all going to the corporation. Money that is spent on infrastructure that will aid the larger community should be seen differently from simple tax abatements or credits or outright grants to the corporation. The widening of roads; the upgrading of subways; the additions of buses are not just giveaways to the corporation if many will use the new or improved facilities.

And we should also realize that some of the laments are not about corporate giveaways. More than a few New Yorkers bemoan the Amazon move for what it will do to housing costs around the new headquarters and for the strains it will add to an already overburdened transportation system. Of course, if Amazon came without governmental incentives, these increased pressures on housing and subways would still exist. The complaints are not really about the incentives; the complainers don’t want Amazon to come at all.

New York already has affordable housing and transportation issues. An Amazon move may intensify them, but it will not create them. They are difficulties that ought to be addressed with or without the move. Corporate incentives are not the real villain here.

Corporate incentives granted by localities to attract corporations highlight the fact that we do not have a national economy. We may talk about gross domestic product numbers or look at the national unemployment data. We may give our presidents credit or blame for how the economy is doing, but we don’t have a national economic policy. If we did, states and localities would not compete against each other to get corporations. With a true national economic policy, Amazon would have decided what location made the most sense for its new headquarters, and no locality would have offered it incentives. From the nation’s perspective, the same number of jobs would have been created at the same salaries without any governmental incentives.

At least with Amazon incentives, the country has new jobs, but often incentives are offered to lure a factory from one part of the country to another. These do not create employment for the nation. A company employs, say, 100 people in Wisconsin at a prevailing wage of $45,000. Texas comes along and says, ‘Move to the Lone Star State. Our prevailing wage is only $35,000, and we will give you some tax incentives.’ If the plant moves, Texas politicians may claim that they have created 100 new jobs, but is the country as a whole better off? The same number of people are working, but wages in the country will have dropped by a million dollars. Corporate profits will be up while the overall tax revenues in the country will have dropped. But Texas will, no doubt, proclaim a win and announce the arrival of 100 “new jobs.”

A final concern. If an American factory moves from Wisconsin to Texas, overall wages will have dropped, but the increased corporate profits are likely to stay in the country. In deciding whether the Wisconsin-Foxconn deal is a good one, how should we weigh that corporate profits will flow out of the country?

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Reflections on Corporate Incentives (or Are They Giveaways

 

A nonpartisan agency analyzed the Foxconn proposal and concluded that if the 13,000 new jobs were actually created, Wisconsin would break even after twenty-five years. Even if that growth target were not met and it takes decades longer for the cheeseheads to break even, state officials contend that what Foxconn has been promised is still a good deal for the state because the nonpartisan analysis does not include the 22,000 indirect jobs the factory will generate. The thought is that jobs will be created outside the Foxconn plant because the factory will buy from suppliers within the state and the new workers will spend money locally on consumer items like food and entertainment, and that will generate new jobs.

The notion of breaking even in a quarter century, however, ought to raise questions. Will the factory as planned continue to exist that long? How many factories built twenty-five ago are operating in the form in which they were constructed? Have many required large infusions of capital to alter the plants as the manufacturing world changed? Will Wisconsin have to give more incentives for the capital to be spent so the factory will still operate in the 2040s? Even more to the point, in the fast-moving technology world, what are the odds that a factory built to build flat screen TVs will exist in twenty-five years? What percentage of the factories building televisions in 1993 are still operating?

Amazon may be investing more in human and less in physical capital than Foxconn, but similar questions may also apply to the Long Island City deal. Amazon did not even exist twenty-five years ago. How sure can we be that it will be there in something like its present form twenty-five years hence?

In any event, while economists may calculate whether corporate incentives are a good deal for a locality, we should be skeptical about such projections because they contain many estimates and much guess work. As the famous philosopher said, “It’s not easy to make predictions, especially about the future.” We can’t truly know whether a package of corporate incentives makes sense until many years from now.

Many of the criticisms of the corporate incentives seem misplaced. What are usually taken to be government giveaways often include tax abatements. Thus, instead of paying an eight percent income or sales tax as others must, for example, the deal may be that the corporation will pay only four percent for, say, twenty years. If it is guesstimated that without the abatement the company would have paid $2 billion in taxes during that time, reports will say that the government has given the corporation $1billion in tax incentives. And the cry will go out, as it has in New York, that the money could be better spent on roads, public transportation, police, and housing.

This logic, however, ignores that the government has not shelled out $1billion that could have been spent elsewhere. Instead, it is money that the government does not get, and the complaints ignore that the government will receive $1billion it might not otherwise have received if the company had not come. The government is ahead if the corporation would not have come without the abatement. On the other hand, if the corporation would have come without the tax incentive, then the government has lesser revenue than it otherwise would have.

And that is the truly important question: Would the corporation have made the same location decision without the incentives? Cynics, or realists, say corporations first decide what move is best for them and then, without revealing their decision, go to the already-picked localities and ask them for relocation incentives.

Don’t blame the company for such chicanery. It exists to make money, but, of course, if the company would have made the move without incentives, then the government has wasted resources. Some commentators suggest that Amazon would have made the decisions it did without incentives to move to the Washington, D.C., and New York City areas. They note that the head of Amazon, Jeff Bezos, has a home in Washington and that Amazon would like to be near the nation’s capital. They also point out the inevitability of New York for an Amazon headquarters because that city is the nation’s financial center and has been increasingly attracting people with high tech backgrounds.

I take this certitude of what Amazon would have done without incentives with a grain of salt (which I am sure that I could buy on Amazon). With hindsight, many decisions look obvious. Surely, even if he has a home in Washington, Jeff Bezos, who is perhaps the richest person in the world, could afford acceptable accommodations just about anywhere. Corporations around the country and world raise money from Wall Street without physically being in New York. If Amazon had picked Miami, Minneapolis, or Missoula, commentators would have found reasons why the choice was obvious. (Except if it had been Indianapolis.) Unless corporate documents get leaked showing that the Washington and New York locations were picked before incentives were offered, we simply don’t know whether Amazon would have made the commitments without the governmental offerings.

(Concluded January 21)

Posted on by rjonakait

Reflections on Corporate Incentives (or Are They Giveaways)

 

After much fanfare, Amazon announced that it would place its second headquarters in suburban Washington, D.C., and in the Long Island City neighborhood of New York City. There is a nomenclature problem here. (An aside: I pronounce “nomenclature” with the accent on the first syllable pronounced GNOME. The spouse pronounces it with the accent on the second syllable pronounced MEN. I had not heard anybody else pronounce it her way, and I was convinced that she was wrong—for the first time ever, I might add. But then I heard a Britisher say it as she does. In spite of what you might think of Americans who adopt British pronunciations, let me assure you that the spouse is normally not pretentious.) Can there be multiple headquarters? An organism has but one head. Doesn’t a corporate entity have but one headquarters? And if it can have a second headquarters, can it be in two places?

Amazon, in announcing that headquarters 2A or 2B would be in Long Island City, did an amazing thing. It brought my governor and my mayor together in relative amity. It might seem that Andrew Cuomo and Bill de Blasio, Democrats from New York City with supposed liberal-to-progressive politics, would be natural allies, but both men have huge egos that they work hard to protect, and both are ethically challenged. Perhaps as a result, they seem to despise each other. However, they were together to announce, and take credit for, Amazon’s coming to Queens. Each beamed; each took a metaphorical victory lap. Neither sniped at the other. Seldom have two men looked more content and prouder of themselves.

The smiles, however, soon became forced. Perhaps the two pols expected universal praise for landing 25,000 new jobs at a reported median salary of $150,000. It turns out, though, to get something from Amazon, you must give something to Amazon. Many said that the city and state had given too much. The criticisms spanned the political and ideological spectrum, from the for-no-good-reason-that-I-can-see media darling and demon Alexandria Ocasio-Cortez (AOC achieved a surprise primary win in a Democratic district that assured her election to the House, but that was obtained with fewer than sixteen thousand votes; since she just taken her seat, she has yet to accomplish anything else) to the often mean and looney and wrong Wall Street Journal editorial board.

News reports indicate that New York, through tax abatements, infrastructure spending, and grants, will spend upwards of $3 billion to get Amazon. The briefly happy Cuomo and de Blasio couple maintain that this sum is a good investment because it will generate $9 of wealth for the region for every dollar spent. Others, however, said, “Pshaw,” and talked about phony math, contending that Amazon would have come to the New York area even without such largesse. The critics pointed out that Google and Facebook have been expanding their New York workforces and footprints without such subsidies.

I have been somewhat surprised at all the criticism. New York regularly gives tax abatements and other goodies to businesses, especially to the real estate industry. No single package of government incentives has been as big as what has been offered to Amazon, but surely the aggregate offered to the real estate moguls of New York City, including to Donald Trump before he was president, has been huge. Even so, while the practice of giving such incentives has drawn sharp criticism, the longstanding real estate incentives game has not drawn the ire that has spewed forth about the Long Island City development.

The criticisms also tend to ignore that New York is not alone in the let’s-entice-a-corporation-to-our-locality business. Moreover, the New York incentives are not necessarily out of line with what other governments have given to corporations. In fact, reports state that US cities and states spend up to $90 billion each year in tax breaks and grants to corporations. Not long ago, for example, Wisconsin was in the spotlight when President Trump and then Wisconsin Governor Scott Walker, with much fanfare, announced that Foxconn, a Taiwanese multinational corporation, was going to build a factory to make flat screen TVs in southern Wisconsin, bringing, perhaps, 13,000 new jobs to the Badger State. The president and governor downplayed that Foxconn really promised to hire only 3,000 workers, at an average salary of $53,000 over the following four years. The corporation merely said that there was a “potential” to create 13,000 jobs in the future. The politicians tried even harder to avoid mentioning that Wisconsin was giving almost $3 billion in incentives to Foxconn through income tax credits and sales tax breaks.

Wisconsin committed to $3 billion in incentives to get Foxconn to agree to bring a new factory into the state, a factory that would employ 3,000 at an average wage of $53,000, with a possibility that 13,000 jobs would someday be created at some vague future date. If Wisconsin made a good deal in luring Foxconn, then New York must have made an even better one since for the same amount of financial incentives Amazon says that it will produce more jobs with much higher pay in New York. But did the Badger State make a good deal?

(continued January 16)

Posted on by rjonakait

Snippets

Years ago, I knew someone who kept an autographed picture of Rudy Giuliani on his desk. I wonder if he still does. I wonder if anyone does.

 

The sign said that it was the city’s “only outdoor rooftop skating rink.” I saw a place to rent skates but no one to answer my myriad questions. For example: If a rink is on the “roof,” but the rink is not outdoors, isn’t there a roof on the rink and, therefore, it is not an outdoor rink? And shouldn’t there be a comma between “outdoor” and “rooftop”? And so many more.

 

My sources have told me that President Donald Trump courageously stood up to the Russian in his oft-discussed meeting with Vladimir Putin—Trump would absolutely, positively not have borscht for lunch, or at any other time.

 

“Why would Donald Trump, who prides himself on his good taste, fall in love with Donald Trump?” Edward Sorel, Mary Astor’s Purple Diary: The Great American Sex Scandal of 1936.

 

I try to be good because I believe that if I go to hell, I will be trapped on a stalled elevator with a banjo player.

 

Anne, a public defender, and I were chatting as she drove us to a lunch with other public defenders. After a while, I asked what her husband did, and she replied, “Construction,” but after a brief pause, she said that he had been a teacher and the head football coach at a local high school. Two years ago, she continued, he was in a traffic accident, and a friend, not wearing a seatbelt, was thrown out of the truck and killed. She said that her husband could not concentrate on his work and quit, but then she told me more. Her husband was charged with drunken driving and vehicular homicide. His brother, who had also been in the car, refused to testify at her husband’s trial and was jailed for contempt. Her husband was convicted and was out on bail while the case was being appealed. Probably because he was a school teacher and football coach, the book had been thrown at him. He got a ten-year sentence. I asked Anne if she had children. She said no, but they tried a few years ago when Anne had two miscarriages. Anne looked at me, smiled, and said that she and her husband had concluded that now was not a good time to try again.

 

“A man may live like a fool for a year, and become wise in a day.” John Williams, Augustus.

 

When you see bikers with the big arms and leather vests on one of those three-wheelers, do you think, “Cool,” or are you a little sad?